Except as to the rule of apportionment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

Nobody knows when the bottom is hit until well after the bottom is passed but numbers have been showing most places have been going up lately.
The gentleman in the post says he is looking at total sales. Sales volumes are down because there are fewer houses on the market- they aren't being dumped for whatever they can get and the lower supply is also why prices have been rising. A further drop in prices of 50% over the next three years? I don't think so.

Long blamed for nagging weakness in the housing market, the nation's shadow inventory—distressed residential properties or those somewhere in the foreclosure process—is shrinking at a decent clip according to a new report, falling to a more than three-year low in July 2012.

About 2.3 million homes were delinquent, in foreclosure, or held by mortgage servicers in July 2012, a more than 10 percent drop from numbers reported a year ago, according to CoreLogic, a financial information firm. The July data are the most recent figures available.

Another analyst who ignores the point that a substantial amount of shadow inventory is localized into real estate hellholes. We can talk about shadow inventories in Detroit, southern California, Las Vegas, whatever, all we want, but that inventory has no real effect on prices elsewhere around the United States.

Over the last 3 years, 90% of the new mortgages have been backed by the government in some shape or form. How this type of intervention is typical of a new housing surge is beyond me. My question for the housing bulls would be what happens when mortgage rates go to an unknown crazy high number like 6%?..... I know right, it could never happen. Just keep banking on the Federal Reserve to create something out of nothing.

Most people when buying a home look at how much a month it will cost them and use that to figure out what price of a home they can afford. If they want to buy and interst rates go up, they will not necessarily decide not to buy but will want to buy a slightly lower priced home. In 1980 mortgage rates actually hit nearly 20% and people still bought homes. Historically, six percent is still a low interest rate on a mortgage. Refinancing of loans would drop pretty significantly if rates went back up to six percent but sales would not necessarily plunge.

Prior to 2003, higher mortgage interest rates were the norm. In the early 1970s, rates hovered in the 7-percent range and spiked up above 9 percent in late 1975, late 1976 and most of 1978. At the end of the decade and throughout the 1980s, mortgage interest rates rarely dipped lower than 10 percent.

In the early 1980s, mortgage interest rates brushed the stratospheric highs of 18 percent and even 19 percent. Imagine trying to get a home loan with an interest rate of 18 percent. At that rate, the mortgage interest deduction would be a very lucrative income tax perk, but the monthly payment on a loan would be far more painful than a typical mortgage payment today.

During the 1990s, mortgage interest rates ranged from around 7 percent to roughly 9 percent for many years. It was only in 2000 that rates began to fall to earth. They held at less than 9 percent in 2000, less than 8 percent in 2001 and less than 7 percent in 2003.

He mentions that he knows of no metro area that has hit bottom, yet he mentions Phoenix as a place that is nearest the bottom. The Phoenix area hit bottom a year and a half ago, and has been on the rise since then. Shadow inventory will remain a mystery, but on the ground, there are places where houses are being multi-bid up as much as 50% (i.e. 100k bids up to 150k). He mentions homes for 80k there, which means he doesn't know today's reality.

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And not too long after that cartoon was drawn the stock market started rising again (actually March 2009)- going back to over 13,000.

If/when the DOW makes a new all time highs, then the DEAD CAT BOUNCE will be wrong. Until then...

Originally Posted by Jordan

The point at which you use the Dow as a proxy for the economy, housing, or even the stock market, whatever argument you're trying to make should be discarded entirely.

lol, my point was the DEAD CAT BOUNCE which this pic illustrates very well, and it's what the housing market is currently doing in some parts of the country. If housing across the nation reaches a new all time highs, I'll admit I was wrong.

The reality is, I don't really know anything, I'm just parroting what I've heard/read from sources who I think might be right. Everyone's just guessing at this point.

And not too long after that cartoon was drawn the stock market started rising again (actually March 2009)- going back to over 13,000.

If the fed handed out enough money to the right people, the DOW could be over 50,000 and that doesn't mean shit for the economy.

Samuel 810 Samuel told all the words of the Lord to the people who were asking him for a king.11 He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots.12 Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots.13 He will take your daughters to be perfumers and cooks and bakers.14 He will take the best of your fields and vineyards and olive groves and give them to his attendants.15 He will take a tenth of your grain and of your vintage and give it to his officials and attendants.16 Your male and female servants and the best of your cattle[c] and donkeys he will take for his own use.17 He will take a tenth of your flocks, and you yourselves will become his slaves.18 When that day comes, you will cry out for relief from the king you have chosen, but the Lord will not answer you in that day.”

Any sign of recovery is entirely based around governmental intervention which is based entirely on debt.

It's all a facade that will crumble back to earth if it ever manages to leave orbit.

Real wealth and real prices haven't gone anywhere but down since 2000, if you aren't investing in silver and gold (with more focus on silver since there's much greater gains to be made) you are setting yourself up for disaster.

We may have some short term paper gains but commodities are the real wave of the future...

If/when the DOW makes a new all time highs, then the DEAD CAT BOUNCE will be wrong. Until then...

lol, my point was the DEAD CAT BOUNCE which this pic illustrates very well, and it's what the housing market is currently doing in some parts of the country. If housing across the nation reaches a new all time highs, I'll admit I was wrong.

Rising for over three years would hardly be considered a "dead cat bounce". A "dead cat bounce" is when it is going down, goes up a bit and then resumes its decline.

As long as wages stagnate home prices will languish along with them. Sure, population growth leads to a natural demand for housing, but it also injects competition for wages. With an overall stagnating economy, the trend for housing prices continues to be a correction to historical norms.

Under the cover of artificially low rates, this appears to make housing affordable. The counter point again being, the price to income ratio is still 10% above historical norms. So we either need to see incomes rise or prices fall.

The bump in the last 3 years is a cyclical bump (even tho it isn't really a bump). This is investment money looking for a home. Sure people are levering up on the shadow inventories, but there is no easy way for someone without cash to do this.

And of course the best REO is going to catch a competitive bid from the relatively few investors with non debt based capital.

For every REO that catches a 50% bid, there is 3 that catch no bid. So while we may see REO bid 50% of ask from 100k to 150k, we see 3 more REO bid 0% of ask from 100k to 0. So for every REO that sells pushing the price up, you have 2 that hold neighborhood values flat, and 1 that drops the value.

Cyclical bump. Historical revision to the mean. Prices are too high vs income. Affordability is STILL artificially low. Thus 90% government backed purchases which do absolutely nothing to move the market and arguably shrink it. vs a measly 10% cash buyers setting true value based on the hope that the other 90% will find income to live up to their end of the bargain.

My guess, silver saw its last low around $26 , Dow, saw its last high @ 14 k. Housing cannot and will not recover because unemployment will rise next year , people with jobs have houses, people without cannot buy . Just my guess.

I will go as far as to say that, in real (inflation-adjusted) terms, there will be no bottom at all until a generation after the education finance Ponzi is resolved.

Basically there's a whole generation of borrowers that simply won't be buying homes at all because the money they would have had to do so went to acquiring basic certification to work (AKA a 'college degree') instead. The consequences of taking those buyers out of the pipeline completely will last until that generation is dead.

The only way I see this market going up is if millions of homes are deliberately destroyed by the government. With a generation of demand eliminated, the only way to support prices is to eliminate a corresponding amount of supply. I am also cynical enough to believe a government desperate enough would find a way to rationalize and execute exactly such an operation.

“If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen.”

I have considered that ,no real reason not to just destroy the junk shit , lots will be worth more without them , maybe , some day , and it eliminates the cheap housing , bargains, older stuff , not desireable to the "green" nutjobs, who , now , basically run the Senate and White House administration, own , The Vampire , EPA....

I have considered that ,no real reason not to just destroy the junk shit , lots will be worth more without them , maybe , some day , and it eliminates the cheap housing , bargains, older stuff , not desireable to the "green" nutjobs, who , now , basically run the Senate and White House administration, own , The Vampire , EPA....

There is plenty of reason for the government not to just destroy peoples private property in order to make other peoples property worth more...

As long as wages stagnate home prices will languish along with them. Sure, population growth leads to a natural demand for housing, but it also injects competition for wages. With an overall stagnating economy, the trend for housing prices continues to be a correction to historical norms.

Under the cover of artificially low rates, this appears to make housing affordable. The counter point again being, the price to income ratio is still 10% above historical norms. So we either need to see incomes rise or prices fall.

The bump in the last 3 years is a cyclical bump (even tho it isn't really a bump). This is investment money looking for a home. Sure people are levering up on the shadow inventories, but there is no easy way for someone without cash to do this.

And of course the best REO is going to catch a competitive bid from the relatively few investors with non debt based capital.

For every REO that catches a 50% bid, there is 3 that catch no bid. So while we may see REO bid 50% of ask from 100k to 150k, we see 3 more REO bid 0% of ask from 100k to 0. So for every REO that sells pushing the price up, you have 2 that hold neighborhood values flat, and 1 that drops the value.

Cyclical bump. Historical revision to the mean. Prices are too high vs income. Affordability is STILL artificially low. Thus 90% government backed purchases which do absolutely nothing to move the market and arguably shrink it. vs a measly 10% cash buyers setting true value based on the hope that the other 90% will find income to live up to their end of the bargain.

I do not buy until interest rates are at least 8% preferable 12%. When rates do rise, and the peoples wages have not moved, how are they going to afford to pay a higher monthly mortgage payment? They are not, so the principal must decline. Then I pay cash, after the principal drop.

I have considered that ,no real reason not to just destroy the junk shit , lots will be worth more without them , maybe , some day , and it eliminates the cheap housing , bargains, older stuff , not desireable to the "green" nutjobs, who , now , basically run the Senate and White House administration, own , The Vampire , EPA....

AHA! NOW it's making sense why the banks are currently allowed to let abandoned foreclosures sit for FIVE YEARS without offering them up for sale. They WANT them to deteriorate. Wow...

Most people when buying a home look at how much a month it will cost them and use that to figure out what price of a home they can afford. If they want to buy and interst rates go up, they will not necessarily decide not to buy but will want to buy a slightly lower priced home. In 1980 mortgage rates actually hit nearly 20% and people still bought homes. Historically, six percent is still a low interest rate on a mortgage. Refinancing of loans would drop pretty significantly if rates went back up to six percent but sales would not necessarily plunge.

The National Association of Realtors' (NAR) Housing Affordability Index reached a record high this January, at 206.1. January 2012 is the first month since the index's inception in 1970 that the index has hit or passed 200, the group announced this week.

The index, calculated monthly by NAR, is built from the relationship among three data points: median home price, median family income, and average mortgage interest rate. The higher the index score, the greater the affordability.

The index aims to measure the affordability of a median-priced, existing single-family home by a median-income-earning family. An index of 100 represents a family's ability to exactly afford such a home, with a 20 percent down payment and mortgage payments at 25 percent of the family's gross income.

Late 2011 saw a steady monthly rise in the index from June's 172.4, the 2011 low, to 197.9 in December 2011. The index has risen from 169.4 in 2009 to 174 in 2010, and to 184.5 in 2011.

The National Association of Realtors' (NAR) Housing Affordability Index reached a record high this January, at 206.1. January 2012 is the first month since the index's inception in 1970 that the index has hit or passed 200, the group announced this week.

The index, calculated monthly by NAR, is built from the relationship among three data points: median home price, median family income, and average mortgage interest rate. The higher the index score, the greater the affordability.

The index aims to measure the affordability of a median-priced, existing single-family home by a median-income-earning family. An index of 100 represents a family's ability to exactly afford such a home, with a 20 percent down payment and mortgage payments at 25 percent of the family's gross income.

Late 2011 saw a steady monthly rise in the index from June's 172.4, the 2011 low, to 197.9 in December 2011. The index has risen from 169.4 in 2009 to 174 in 2010, and to 184.5 in 2011.

regarding the inman link for the NAR calculations on affordability: You do the math on that? What jumped out at me was the part in red. Also, this calculation is STILL a function of price to income ratio, which is STILL above the historic mean. I'd like to see a definition of what this monthly report considers affordable. If it is what I have highlighted in red, then I think the report is self serving to that organization if not completely delusional.

Consider the raw numbers in a couple scenarios, no tax, no insurance, no interest, just straight up monthly principle payments over 30 years (360 payments).

And finally, lets take the middle rate, 4.5% and add in property tax and PMI, both of which are typically held in escrow and included as part of the non-principle, non-interest monthly payment. Since the borrower is putting down 20%, we will ignore PMI, although I am not sure if lenders have adjusted upwards their PMI rates. We'll just leave it at that. For taxes, I looked at this link by a tax payer association study in 2011 to get an idea of what regional rates are urban and rural. 1.33% seems to be middle ground for our basic study here on the NAR data.

So at 4.5% interest and a 1.33% tax rate

100k - 20k down and minimum of 30,096.48 (gross income) monthly rent payment of $627 or $7,524 a year
150k - 30k down and minimum of 39,825.12 (gross income) monthly rent payment of $830 or $9,960 a year
200k - 40k down and minimum of 49,553.28 (gross income) monthly rent payment of $1032 or $12,384 a year

now, anyone want to see what is left over after income tax?

here i'll do it real quick. This is for estimated 2013 finances.

100k home, after tax and mortgage payment is 20,305 disposable income minimum affordability. $1,692 a month
150k home, after tax and mortgage payment is 25,180 disposable income minimum affordability. $2,098 a month
200k home, after tax and mortgage payment is 29,031 disposable income minimum affordability. $2,419 a month

Now, raise your hand if your rent payment is 1/3 or less of your overall monthly bring home.
Congratulations! You are pre-qualified for a home loan!

Now, raise your hand if you have at least $20,000 in the bank.
Congratulations! We now would like to run your credit and see home much of a house you can afford!

Now, raise your hand if your credit score is between 500 and 600.
Congratulations! you can afford to live in a 100k or cheaper home!

Now, raise your hand if your credit score is between 600 and 700.
Congratulations! you can afford to live in a 100k-200k home!

Now, raise your hand if your credit score is over 700.
Congratulations! you can afford to live in a 200k or more expensive home!

If you made it this far, then the housing market is booming! If you made it this far and don't have your doc stamps, the market is still looking for a bottom and you better sell now!